5 Stocks in a Tailspin

Individual stocks can surge 10%, 25%, or even higher in a short period of time. And they can fall just as far, just as quickly. For example, few investors foresaw the day AIG would fall 61% as the company sat on the verge of collapse, waiting for a multibillion-dollar rescue.

Big drops in share price can sometimes signal material defects or new risks. But at other times, they're simply pullbacks after a long run-up. Fortunately, we have Motley Fool CAPS, a great resource to help us understand the larger picture behind big price drops -- and even help take advantage of unwarranted pessimism.

Is the sky falling?
CAPS contains more than just the crowd's opinions. Its best-performing members' votes count more in shaping each company's rating than do the picks of their poorer-performing peers.

We'll use CAPS' handy stock screening tool to quickly zero in on companies that have been slashed by at least 25% in the last four weeks, and which have a market cap greater than $100 million and a beta of less than 3.

Here's a sample of stocks our CAPS screen returned:

Source: Motley Fool CAPS. Price return from Aug. 15 through Sept. 12.

VeraSun Energy
It hasn't been easy for ethanol producers like VeraSun Energy lately. Once the darling of the alternative-energy craze, the industry is now being blamed for contributing to the rising cost of food. And with the disdain for leveraged balance sheets lately, Verasun's nearly $900 million in debt doesn't earn high marks.

With some contracts requiring the company to purchase corn for above-market prices, VeraSun expects a much larger-than-expected loss for the third quarter. And now, one day after initiating a public offering of 20 million shares, the company's share price is taking a pounding, down over 65% for the day. At this point, only 55% of the 538 CAPS members rating Verasun Energy expect it to outperform the market.

DryShips
A darling of the dry-bulk shipping world, DryShips has seen top CAPS members' support wane lately. With the Baltic Dry Index -- which gives an aggregate indication of shipping dayrates -- in steep decline lately, shipping stocks like DryShips and Diana Shipping (NYSE:DSX) are spiraling down with it.

The sale of three ships helped DryShips boost its second-quarter profit to nearly $300 million, but without the one-time gain, numbers fell short of analyst expectations. But the company has managed a high fleet utilization rate of 99% for the quarter, and it's been locking in more long-term charters. This leaves 80% of the 2,360 CAPS members who've rated DryShips bullish on the company.

Evergreen Solar
The first signs of collateral damage from the Lehman Brothers failure are emerging, and solar stocks like Evergreen are taking a hit via some hedging transactions with the bank. Evergreen could lose almost $40 million from a deal in which it loaned almost 31 million shares to Lehman.  

The bad news capped a quarter that saw Evergreen's operating losses double, though this was partly due to building out capacity for future growth. That's one reason why 91% of the 1,772 CAPS members rating Evergreen Solar still expect it to outperform the market in the future.

Hecla Mining
Hecla Mining had its highest quarterly silver production in five years in its second quarter, but it's taking up space in the doghouse after some one-time items led to a loss of $44.4 million. Many precious-metals miners have seen their shares drop significantly lately as spot prices fluctuate, but some still see solid underlying fundamentals and expect a recovery. More than 96% of the 604 CAPS members rating Hecla Mining feel that way, and they've voted for the company to outperform the market.

Massey Energy
Only a few months ago, coal miner Massey Energy was experiencing upgrades based upon higher coal prices and increased production volumes. But investors have grown concerned over the direction of coal, worried that the optimism may have gotten ahead of itself. Massey confirmed some of those fears when it recently lowered its coal price and production projections for 2008. Still, more than 92% of the 601 CAPS members rating Massey Energy see it outperforming the market.

Whether or not you believe a fall in any stock is warranted, your own research is ultimately more important than collective opinions. CAPS can help you quickly focus your due diligence, and even point out potential pitfalls you may not have seen.

Add your take on these or any of the 5,500 stocks that 115,000-plus members have covered in Motley Fool CAPS.